Germany's second largest airline is in grave danger of going bust

After years of financial struggles, Air Berlin filed for
insolvency on Tuesday.

Germany's second largest airline, although insolvent, is expected
to continue operation with the aid of a $176
million bridging loan, Reuters reported.

However, Air Berlin's future remains murky after Etihad Aviation
Group, one of the company's main financiers, announced it has cut
off the airline's access to its coffers.

In reaction to Air Berlin's decision to file for insolvency,
Etihad wrote in a statement:

"This development is extremely disappointing for all
parties, especially as Etihad has provided extensive support
to Air Berlin for its previous liquidity
challenges and restructuring efforts over the past six
years. In April this year, Etihad provided EUR
250 million of additional funding to Air
Berlin as well as supporting the airline to
explore strategic options for the business. However, Air
Berlin’s business has deteriorated at an
unprecedented pace, preventing it from overcoming its significant
challenges and from implementing alternative strategic
solutions. Under these circumstances, as a
minority shareholder, Etihad cannot offer funding that would
further increase our financial exposure. We remain open to
helping find a commercially viable solution for all
parties."

Etihad, which owns 29.2% of Air Berlin, has spent more than $2.3
billion trying to turn around the ailing German carrier. Etihad
and Air Berlin have been equity partners since 2012.
Unfortunately, the German airline has not been able to deliver
Etihad the solid footing in the European market it was looking
for.

At the same time, Lufthansa, Germany's national airline,
announced it is in negotiations to take over parts of the Air
Berlin's operation during the company's reorganization process.